Oil driven higher by Ukraine tumult, stoking supply fears

Friday, 2 May 2014 | 2:47 PM ETReuters

SHARES

Source: Denver International Airport

Brent oil rose on Friday as traders covered short positions after a week of sell-offs and fighting intensified between Ukraine and pro-Russian rebels, while a positive U.S. jobs report supported U.S. crude prices.

U.S. President Barack Obama and German Chancellor Angela Merkel vowed further sanctions against Russia if Moscow impeded plans for elections in Ukraine later this month. The announcement came after pro-Moscow rebels shot down two Ukrainian helicopters, killing two crew members, in the eastern city of Slaviansk. Separately, three people were killed when pro-Russian activists attacked supporters of Ukrainian unity marching through largely Russian-speaking Odessa.

Brent crude rose 80 cents to near $109 a barrel after settling on Thursday at its lowest close since April 11. The international benchmark finished the week nearly 1 percent lower. U.S. crude ended the session up 34 cents at $99.76 a barrel, managing to end the week 0.7 percent higher.

US oil companies investing in Ukraine

Yuriy Boyko was Ukraine Energy Minister under ousted president Viktor Yanukovich, and now he's running for president. More importantly, though, he is still facilitating talks between the governments of Russia and Ukraine as well as high level executives of big U.S. and Western oil companies. He told CNBC's Dina Gusovsky that American companies have already shelled out or plan to invest a huge amount of money in Ukraine's oil and gas sector.

Stoking fears that the conflict may lead to a supply disruption, Russia's energy minister said natural gas exporter Gazprom would reduce supplies to Ukraine in June if no prepayment is received this month.

Oil was supported by data showing U.S. employers hired workers at the fastest clip in more than two years in April, and unemployment dived to a 5-1/2-year low of 6.3 percent, pointing to a rebound in economic growth in the world's largest oil consumer.

Further gains were tempered by the impending return of more Libyan exports. In Libya, state-run National Oil Corp (NOC) said on Thursday that the Zueitina port was expected to load its first tanker of crude since reopening after nearly 10 months due to protests.